Quote from: lonelyminer on June 21, 2012, 10:15:09 AM

Quote from: jtimon on June 03, 2011, 04:25:22 PM

It is true that price deflation encourages hoarding.

I humbly disagree. If people want to hoard, they can simply use other liquid assets for this purpose. These assets do not need to be usable as a payment method. Why should a decrease of price level turn people into misers?

What causes disturbances are unpredictable changes, e.g. changes in the changes of the price level (i.e. second level derivative of price). That might, for example, shift the attention of hoarders between money and other liquid assets and disturb some businesses. But eventually, people's expectation of price level changes and the current price of money will equilibrate. Bitcoin is highly resistant to supply side shocks, so mostly only demand side changes affect the price.

I'm mean specifically hoarding the medium of exchange. Hoarding other liquid assets or canned food doesn't hurt the economy in any way.
This kind of price deflation (and credit/debt deflation too, just excluding "growth deflation") hurts the economy because it hurts merchants, investors (well any borrower in general) and destroys the credit/debt, thus destroying the financial market. It destroys businesses that would be profitable otherwise and that springs unemployment no matter how predictable the deflationary bust is. Give me a business plan that takes into accounts for example, 20% predictable price deflation.

Quote from: lonelyminer on June 21, 2012, 10:15:09 AM

Quote from: jtimon on June 03, 2011, 04:25:22 PM

But that's why merchants will have to accept other currencies to keep on selling.

I humbly disagree as well. A disruption might cause this when the prices take a while to adapt, and a shortage of money appears. But unless the prices are regulated, this wouldn't take long. After the equilibration, the mismatch between demand and supply decrease, and there will be again less reason for competing currencies.

It was you who bring the term "shortage of money", not me. That's kind of Keynesian. It's not about quantity, what's important is velocity.
I've agreed that runaway deflation (in abscence of intervention) won't take long to disappear, but that doesn't make it less destructive.
A nuclear explosion is fast too.

Quote from: lonelyminer on June 21, 2012, 10:15:09 AM

Quote from: jtimon on June 03, 2011, 04:25:22 PM

That currency competition will decrease the value of bitcoin as a medium of exchange, decreasing demand, decreasing deflation.
Since bitcoin is not the only currency on earth, deflation can't kill it.

Here however I can agree. An alternative currency can smoothe the equilibration of the prices, or speed it up. But it's not inevitable. Derivative markets (short selling, margin trading) can have the same effect.

So do you agree that businesses would accept other monies to keep on selling?
I'm not against future markets but they're not the panacea. Will they make hyperinflation less harmful too?

Quote from: JoelKatz on June 22, 2012, 08:02:19 AM

Quote from: jtimon on May 28, 2012, 11:17:44 AM

Does this means that you would be ok with a government issued currency with a fixed monetary base and demurrage? What could be the problems?
For the bitcoin like currency...please, tell me what would be broken.

The problem is that you would get much less hoarding than is ideal, leading to wasteful consumption. A currency with no demurrage provides as close to the optimal balance of saving and spending as we are likely to be smart enough to manage to get. Every factor that increases the value of the currency to the hoarder also increases the value of the currency to those who would try to ply the currency from the hands of the hoarder -- if the currency is worth more, the price will just be lower, but the trade will happen just the same. However, demurrage disrupts this balance by injecting a "hot potato" factor, leading to inefficient spending and discouraging saving.

Then we must first discuss what is the ideal level of hoarding, because I think that level is zero.
I get your point that deflating money is more attractive for everyone, not just the hoarders, and that makes people more willing give up more real assets for that money but that only accelerates the process. The "hot potato" during deflation are real assets and everybody runs into money.
Savers benefit society when they lend their money for productive enterprises, not just by saving. If you hoard canned food or oil, you're not harming society, you're buying an insurance and you're paying for it in concept of storage expenses. But you cannot lock the medium of exchange because it is harmful and because the medium of exchange is a common.
You have provided something to society and you deserve to get something back, maybe in the future, but you can't lock the medium of exchange. If you want to be compensated in the future lend your savings.
What Keynesians get wrong is that they don't care about where is the demand that they're missing. "There's missing demand, let's just introduce more". But public spending doesn't becomes more legitimized because where on an economic crisis. It does that matter where that demand comes from (as austrians show us) and it must be from the hoarders. Is the hoarders demand what is missing. You can't just substitute it with newly printed money or public indebtedness.
Offer is composed by all the wares offered in the market. With demurrage money would become materialized demand, which is what it should be.